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Employment Situation: More Strong Job Gains, Wage Growth Steady

March 10, 2017
Bottom Line: Payroll Employment rose by 235k in February, compared with consensus of 200k (though recent data had most of us suggesting there was upside risk to that). Gains were led by goods producing sectors, especially construction, in February. There were upward revisions to the previous two months which added a total of 9k jobs due mostly to more teachers added to January payroll than previously reported. Job creation has averaged 209k over the past 3 months vs. the past 12 months average of 196k.

The unemployment rate dropped, as household employment grew more than the increase in labor force. Over the past year, the unemployment rate has declined by 0.2 percentage points, the result of 1,485k more people finding jobs as 1,168k more people entered the labor force.

Both hourly and weekly earnings rose modestly after a modest increase in January. The workweek was unchanged and the 3-month average is now 34.4. Average hourly earnings have grown at a 2.8% annualized pace in the last 3- and 12-months, compared to 2% for all of 2016 and 2.1% for 2015.

Payroll Employment rose by 235k in February, compared with market expectations for an increase of 200k. The prior 2 months were revised, higher in January by 11k and lower in December by 2k.

Government jobs ROSE by 8k. Consequently, private sector jobs ROSE by 227k. Overall employment is now 1.6% ABOVE its year ago level, Over the past 12 months, 2,350k jobs have been created.

In February, the job gains were in Trade, Transportation & Utilities (-8k with -26k of those in Retail Trade), Professional & Business Services (+37k with the addition of 3k in Temp Help Services), Construction (+58k), Education & Health Services (+33k), Manufacturing (+28k), Leisure & Hospitality (+26k), Other Services (+8k), and Other Services (+8k).

The Unemployment Rate FELL by 0.1 percentage points in February to 4.7%, in-line with market expectations for a small decline to 4.7%.

Household employment rose by 447k while the labor force increased by 340k, resulting in a decrease in the number of unemployed of 107k. The Labor Force Participation Rate ROSE by 0.1 percentage points to 63.0%. The Employment-Population Ratio ROSE by 0.1 percentage points to 60.0%.

The number of people Working Part-Time for Economic Reasons FELL by 132k to 5,637k. while Long-Term Unemployment FELL by 49k to 1,801k (accounting for 23.9% of the unemployed), while the Mean Duration of Unemployment was UNCHANGED by 0.0 weeks to 25.1 weeks.

There are now 7.5 million people officially unemployed. In addition, there are another 5,597k people who say they want a job but are not currently looking for one. Finally, another 5,637k people are working part-time because of slack economic conditions.

Hourly Earnings ROSE by 0.2% in February, below market expectations of 0.3%. Hourly earnings are now 1.7% ABOVE their year ago level.

Weekly Earnings also ROSE by 0.2%, the result of the change in hourly earnings and a steady workweek. Weekly earnings are now 2.5% ABOVE their year ago level.

The Average Workweek was UNCHANGED at 34.4 hours, in line the market consensus at 34.4 hours.